Bourses continue to trade higher; Capital Goods stocks lead

Key benchmark indices continued to trade higher in early afternoon session on sustained buying, with the Sensex trading above 31,850 and the Nifty above 10,000 marks. Sentiments remained up-beat with the outcome of the crucial meeting of the Goods and Services Tax (GST) Council that took place on Saturday, where the council cut GST rate for over 40 items of mass consumption. Some optimism also came with foreign brokerage’s report that India’s trade deficit is expected to improve in August to about $10.3 billion from $11.5 billion in July, largely on moderation in export as well as import growth. Moreover, positive signals from Asian markets coupled with sustained buying mainly in Capital Goods, Industrials, Oil & Gas and Utilities stocks, also contributed to the gains. Broader indices too witnessed buying as both mid and small cap indices were trading in green. Meanwhile, the rupee was still down by 11 paise to 63.89 against the US currency in early trade following sustained dollar demand from banks and importers. In scrip specific development, Petronet LNG was up by over five and half percent after signing an agreement for purchase of 1.44 MTPA of LNG from Mobil Australia Resources Company (LNG Supplier), an affiliate of ExxonMobil Company, for a period of 20 years, from Gorgon project.

On the global front, Asian markets were trading mostly in green after Hurricane Irma weakened and North Korea marked a weekend holiday with celebrations but refrained from launching more missiles, easing geopolitical tensions. Back home, the BSE Sensex is currently trading at 31898.34, up by 210.82 points or 0.67% after trading in a range of 31797.89 and 31926.74. There were 24 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.87%, while Small cap index was up by 0.87%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.97%, Industrials up by 1.34%, Oil & Gas up by 1.24%, Utilities up by 1.20% and Power up by 1.14%, while Telecom down by 0.42%, TECK down by 0.06% and IT down by 0.00% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors - DVR up by 2.46%, Larsen & Toubro up by 2.41%, Maruti Suzuki up by 1.72%, HDFC Bank up by 1.57% and Coal India up by 1.32%. On the flip side, Infosys down by 0.67%, Bharti Airtel down by 0.56%, SBI down by 0.33%, Sun Pharma down by 0.32% and ICICI Bank down by 0.24% were the top losers.

Meanwhile, global rating agency, Fitch ratings in its latest report has said that India could actually produce surplus power in the financial year 2017-18, with an energy deficit of just 0.6 percent in the first three months of this fiscal year- a period of usually high seasonal electricity demand. It noted that a combination of subdued demand growth, consistent capacity additions along with relatively better networks is driving a widening surplus at energy exchanges. Though, it also said that sporadic outages continue to plague the country. At the same time, it pointed out that about 24 percent of households are yet to be electrified in India.

The ratings agency observed that the inability of financially stressed power distribution companies to purchase power, along with the absence of adequate network coverage, exerts significant downward pressure on India's thermal power utilisation. It noted that the cost-revenue gap remains at Rs 0.42 per kilowatt hour (kWh) along with aggregate technical and commercial (AT&C) losses of 20.6 per cent (for 24 states). It expects that improving these operational inefficiencies will drive any sustainable improvement.

On the other hand, the report stated that the government exceeded its target of setting up transmission lines again in 1H17, helping addressing power woes. It highlighted that electricity prices at exchanges declined by another 11 percent to Rs 2.4 per unit (kWh) in 2016-17. It also mentioned that tariffs are taking a hit mainly from the prevailing electricity demand-supply dynamics, lower coal costs and a decline in renewable tariffs.

As per the report, distribution utilities are shying away from signing new long-term power purchase agreements (PPAs) for both thermal and wind capacity - while awaiting clarity on the auction route for wind power, supported by the availability of cheaper spot electricity. It said that the new tariff-based auction for wind power yielded prices of Rs 3.5 per kWh (or unit) in February 2017, down from the lowest regulatory tariff of Rs 4.2. It also noted that solar tariffs also hit a new low of under Rs 3 a unit in May 2017 – making solar the cheapest source of electricity in the country.

The CNX Nifty is currently trading at 10009.20, up by 74.40 points or 0.75% after trading in a range of 9968.80 and 10012.80. There were 40 stocks advancing against 11 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 5.14%, GAIL India up by 4.10%, Tata Power up by 2.86%, Larsen & Toubro up by 2.52% and Tata Motors - DVR up by 2.14%. On the flip side, Vedanta down by 1.18%, Bharti Airtel down by 0.86%, Infosys down by 0.63%, Hindalco down by 0.48% and Sun Pharma down by 0.48% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 1.85 points or 0.1% to 1,781.75, Shanghai Composite was up by 7.57 points or 0.22% to 3,372.81, KOSPI Index rose 15.36 points or 0.66% to 2,359.08, Jakarta Composite added 17.63 points or 0.3% to 5,874.75, Nikkei 225 increased 270.95 points or 1.41% to 19,545.77 and Hang Seng gained 295.98 points or 1.07% to 27,964.45.

On the flip side, Taiwan Weighted decreased 37.79 points or 0.36% to 10,572.16.